Correlation Between Silicon Motion and SAFETY MEDICAL
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and SAFETY MEDICAL at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Silicon Motion and SAFETY MEDICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silicon Motion Technology and SAFETY MEDICAL PROD, you can compare the effects of market volatilities on Silicon Motion and SAFETY MEDICAL and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Silicon Motion with a short position of SAFETY MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and SAFETY MEDICAL.
Diversification Opportunities for Silicon Motion and SAFETY MEDICAL
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Silicon and SAFETY is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and SAFETY MEDICAL PROD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAFETY MEDICAL PROD and Silicon Motion is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Silicon Motion Technology are associated (or correlated) with SAFETY MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAFETY MEDICAL PROD has no effect on the direction of Silicon Motion i.e., Silicon Motion and SAFETY MEDICAL go up and down completely randomly.
Pair Corralation between Silicon Motion and SAFETY MEDICAL
Assuming the 90 days trading horizon Silicon Motion Technology is expected to generate 1.45 times more return on investment than SAFETY MEDICAL. However, Silicon Motion is 1.45 times more volatile than SAFETY MEDICAL PROD. It trades about 0.05 of its potential returns per unit of risk. SAFETY MEDICAL PROD is currently generating about -0.59 per unit of risk. If you would invest 5,200 in Silicon Motion Technology on October 7, 2024 and sell it today you would earn a total of 100.00 from holding Silicon Motion Technology or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 41.18% |
| Values | Daily Returns |
Silicon Motion Technology vs. SAFETY MEDICAL PROD
Performance |
| Timeline |
| Silicon Motion Technology |
| SAFETY MEDICAL PROD |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Silicon Motion and SAFETY MEDICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and SAFETY MEDICAL
The main advantage of trading using opposite Silicon Motion and SAFETY MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, SAFETY MEDICAL can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SAFETY MEDICAL will offset losses from the drop in SAFETY MEDICAL's long position.| Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc |
| SAFETY MEDICAL vs. Apple Inc | SAFETY MEDICAL vs. Apple Inc | SAFETY MEDICAL vs. Apple Inc | SAFETY MEDICAL vs. Apple Inc |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the CEOs Directory module to screen CEOs from public companies around the world.
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